Rent Control: Beneficial or Harmful?

Rent Control is a city-level prohibition law that regulates the increase in rent prices to a certain extent. It has been banned in 37 states in the past, with the exception of cities such as New York, Los Angeles, San Francisco, and Washington. A state to keep a close look at is California. Recently, an initiative called “Proposition 10” has been a hot issue regarding housing aspects in California. Proposition 10 is a Californian voter initiative that would loosen the constraints put on rent control laws by repealing the Costa-Hawkins Rental Housing Act that restrains certain forms of rent control such as vacancy control.

The basic idea behind rental control and vacancy control is to better the environment for any tenant by preventing the landlords from increasing the rent to the next tenant moving-in, which eliminates the incentive of evicting the poorest tenants. However, while the intention of the control may be beneficial to the society, it might be a mere idea that could bring worsened scenario of higher rents and fewer units overall in the future. According to Stanford analysis, gentrification in San Francisco was intensified due to rent control as many landlords converted rental housing to condominiums to conform to the middle-class. Majority of the economists claim that rent control simply benefits the people today at the expense of people tomorrow.

There may other ways to relieve such issue. In the history of the United States, homeownership has been a big part of the pressure-release controller for rising rent prices. However, home prices have increased beyond the limit of many families in the current years that the rental housing industry has been highlighted without the pressure being able to be relieved. Another possible controller could be tax credits that function against landlords increasing rents. Nonetheless, its enactment has little plausibility due to its nature.

When there is so much controversy regarding rent control from both sides of perspectives, what is the current and would be the future situation for California? As of now, the most plausible result is that Californian tenants would achieve some form of rent control in the upcoming years. However, the main question would still be how stringent the laws would be and to what extent would the law be applied to the rental housing.

Regardless of the outcome, such conflict does not seem to diminish anytime soon. It is critical that the state and local government sectors find a middle-ground solution.

Jennifer Kwon/ Tax Advisors for Champaign Society

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Article Name

Rent Control: Beneficial or Harmful?

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Rent Control is a city-level prohibition law that regulates the increase in rent prices to a certain extent.

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